Order in Council

At Wellington this 20th day of June 2011

Present:His Excellency the Governor-General in
Council

Pursuant to section 154(1)(a), (d), and (e) of the Financial Advisers Act
2008, His Excellency the Governor-General, acting on the
advice and with the consent of the Executive Council, and on the recommendation
of the Minister of Commerce made after consulting the Financial Markets
Authority in accordance with section 154(4) of that Act and being
satisfied of the matters specified in section 154(5) of that Act,
makes the following regulations.

6 New regulations
7A to 7C inserted

“7APublic Trust term deposit is category 2 product

For the purposes of paragraph (k) of the definition of
category 2 product in section 5 of the Act, a fixed term deposit product
offered by Public Trust is a category 2 product.

“7BBank notice product is category 2 product

“(1)For the purposes
of paragraph (k) of the definition of category 2 product in section
5 of the Act, a bank notice product is a category 2 product.

“(2)In subclause (1), bank notice product means a debt security
issued by a registered bank in New Zealand or a specified unit (as
defined in regulation 4) under which—

“(a)the security holder
has the right to demand, at any time, repayment in full of the principal
sum or withdrawal in full of the unit price or value of the units;
and

“(b)the issuer has an
obligation to pay the amount demanded not later than any period (specified
in the terms of issue) after the demand being made; and

“(c)the rate of interest
payable or any other benefit provided does not alter as a result of
the demand being made; and

“(d)no fee or other amount
is payable as a result of the amount demanded not having been held
by the issuer for a particular period of time.

“(3)Paragraphs (a) to
(d) of subclause (2) may, in the case of a specified unit, be subject
to the rights and requirements set out in paragraph (a)(i) to (viii)
of the definition of PIE call fund unit in regulation 4(2) to the
extent that they are described in the investment statement for the
specified units.

extend the existing definition of pure risk contracts of insurance.
These insurance contracts are classified as category 2 products under section 5 of the Financial
Advisers Act 2008 by virtue of being excluded from being investment-linked
contracts of insurance. The extended definition allows pure risk contracts
of insurance to provide for premium refunds. The extended definition
is limited initially to 5 years, providing an opportunity to review
its operation:

reclassify the following products as category 2 products under section 5 of the Financial
Advisers Act 2008:

fixed term deposit products offered by Public Trust:

bank notice products (which are deposit products issued by a registered
bank under which funds are on call, but subject to a minimum advance
notice period). These products may also be issued through a PIE structure.
This reclassification is limited initially to 5 years, providing an
opportunity to review its operation:

building society redeemable shares (which are akin to term deposits)
if the building society is also a registered bank:

provide a new exemption from the Financial Advisers Act 2008 for operators of
registered retirement villages that provide advice or other services
in the ordinary course of their business relating to the acquiring
or disposing of occupation right agreements for their retirement village.
This conduct is regulated under the Retirement Villages Act 2003. The exemption extends
(under section 14(1)(q) of the Financial
Advisers Act 2008) to employees and other persons acting in the course
of, and for the purposes of, the operator's business.